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Ecommerce fraud and online fraud prevention in Mexico

With its ecommerce market expanding from a relatively small base, Mexico reports high consumer awareness of payment fraud. Fraud prevention is considered a key issue by Mexican consumers who will increasingly look for sophisticated protection for their online purchases.
At the end of March 2015, an article in the Mexico Daily News reported that Mexican banks had experienced around 2.9 million cases of suspected fraud involving MXN 7.3 billion or USD 480 million. This represented a 3% increase on the previous year. Credit card fraud accounted for 48% of the total (MXN 3.56 billion), and debit card fraud for MXN 1.6 billion. MXN 10 million of fraud was committed on prepaid cards.
Mexican consumers are already switching banks in search of improved security, with 28% believing that the banks’ security systems for online transactions are insufficient and should be strengthened.
Chip cards were introduced early in Mexico, with 82 million EMV cards rolled out by 2008. Visa’s liability shift at point-of-sale took place in April 2011 and for ATMs in October 2012. Discover is introducing a liability shift on 1 October 2015 although, for pay-at-pump gas stations, this is delayed until 2017.
Initially concentrated in the middle and upper classes of Mexican society, ecommerce growth is expected to ramp up as the number of online shoppers increase. A December 2013 report from Forrester Research Inc. forecasts that the number of online buyers in Mexico will increase 114% from 8.4 million in 2013 to 18 million in 2018.
Consumer concerns about payment security in Mexico underline the importance of effective online fraud prevention measures for merchants seeking to take advantage of this growth.
Aeroplane and bus tickets are favourite ecommerce purchases in Mexico – as well as a favoured target for fraudsters. Companies operating in this sector will want to ensure they have a robust, real-time fraud prevention solution in place to protect themselves and their customers against fraudsters purchasing tickets in the days and hours immediately before travel. Consumer electronics is another key area for online sales, requiring fraud strategies tailored to accommodate high risk products with low margins.
In the absence of home-grown shopping sites, large US retail chains such as Walmart, Home Depot and Lowe’s have entered the market, with Walmart offering same day delivery – allowing it to dominate the market for online physical goods purchase.
Mobile payments are expected to see strong growth as Mexico has the fastest growing smartphone market in the region. Here, as elsewhere, fraud prevention strategies and rules need to be specifically tailored to the mobile channel, taking account of the authentication and verification challenges this channel brings.
More information about ecommerce fraud, mobile fraud and online fraud prevention in Mexico can be found in the Cross-border Ecommerce Report - Mexico